Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, August 24, 2016

Heir-Location Firm Charged with Conspiring to Allocate Customers

AntitrustIn a federal antitrust complaint, an heir-location services firm and its co-owner were charged with conspiring to allocate customers with a competitor. The firm had a 15-year-long streak of allocating customers to co-conspirators “to suppress and eliminate competition.” Similar cases have included a criminal fine of $890,000.

See Jonny Bonner, Heir-Location Firm Charged in Antitrust Probe, Courthouse News Service, August 22, 2016.

Special thanks to Deborah Matthews (Attorney, Alexandria, Virginia) for bringing this Article to my attention.  

August 24, 2016 in Current Events, Estate Planning - Generally, New Cases, Professional Responsibility | Permalink | Comments (0)

Saturday, August 20, 2016

Article on Prudent Investor Rule for Financial Advisers

Prudent investor ruleMax M. Schanzenbach & Robert H. Sitkoff recently published an Article entitled, Financial Advisers Can’t Overlook the Prudent Investor Rule, J. Financial Planning (2016). Provided below is an abstract of the Article:

This article calls attention to the Department of Labor’s imposition of the “prudent investor rule” on financial advisers to retirement savers. This article also canvasses the customary role of an investment policy statement in promoting compliance with the prudent investor rule by professional fiduciaries.

In April 2016, the Department of Labor promulgated a rule that imposes on financial advisers to retirement savers “fiduciary” status under the Employee Retirement Income Security Act. The Department reasoned that the fiduciary duty of loyalty was necessary to protect retirement savers from conflicted investment advice. But in addition to a duty of loyalty, ERISA fiduciary status also imposes a duty of care or prudence. And with respect to investment management, the fiduciary standard of care is governed by the “prudent investor rule.” The basic tenets of the prudent investor rule are grounded in modern portfolio theory. In short, the prudent investor rule requires diversification and an overall investment strategy having risk and return objectives reasonably suited to the purpose of the investment account.

August 20, 2016 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Thursday, August 11, 2016

Avoiding These Eight Red Flags in an Estate Plan

RED-FLAG-1A true estate planner is able to foster trustworthy relationships with their clients while serving them in the fullest capacity. If you notice a gap in an estate-planning document, realize this red flag and know how to solve it.

When creating an estate plan, one goal many clients have is to avoid probate; on the other hand, a lot of clients draft a properly written will. Make sure that your clients goals are met and fill any gap in this estate-planning document. If a trust is in the estate plan, make sure that there is proper funding. Also, protect your client’s assets from creditors by never leaving valuable assets exposed. Similarly, do not leave inheritances in the hands of uninformed beneficiaries who can expose their gifts to creditors as well. Another good idea is to appoint trustees in a manner that gets the job done; you do not want fighting or miscommunication to burden future heirs. Furthermore, a planner should make sure that all account beneficiaries are updated along with any estate-planning documents. Accordingly, life insurance should be right for your client’s situation, determining whether too little or too much insurance can pose a problem. Finally, emphasize to your clients that they need a long-term care arrangement, helping with any unforeseen medical expenditures.

See Eight Red Flags That Your Client’s Estate Plans Are Out of Whack, Wealth Management, August 5, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

August 11, 2016 in Disability Planning - Health Care, Estate Administration, Estate Planning - Generally, Intestate Succession, Professional Responsibility, Trusts, Wills | Permalink | Comments (0)

Friday, August 5, 2016

The Timeliness of Action for Florida Trust Accountings

Trust accountingWhen bringing an action for breach of fiduciary duty for failure to provide a Florida trust accounting, timeliness of the action is key. If the beneficiary does not timely file, then they will not be entitled to an accounting. There is a four-year statute of limitations for bringing this type of claim; however, there is an exception—if the beneficiary receives a receipt of limitation notice, then a six-month limitation is triggered, as discussed in Woodward v. Woodward. In Corya v. Sanders, however, based on the facts of the case, the court concluded that beneficiaries who had not received accountings or limitations notice could not request accountings going back over four years. 

See Anya Van Veen, Florida Trust Accountings: 4 Years or 6 Months to Sue? Woodward v. Corya, Florida Probate Lawyers, August 4, 2016.

August 5, 2016 in Estate Administration, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Friday, July 29, 2016

Article on Appropriate Scope of Contractibility with Fiduciary Loyalty

Fiduciary loyaltyAmir N. Licht recently published an Article entitled, Motivation, Information, Negotiation: Why Fiduciary Accountability Cannot Be Negotiable, D. Gordon Smith & Andrew S. Gold, eds., Research Handbook on Fiduciary Law (Forthcoming). Provided below is an abstract of the Article:

In the debate over contractual freedom or enabling-versus-mandatory rules in fiduciary law, those who do not adhere to an unbridled contractatian approach tend to justify fiduciary law’s strict posture by appealing to transaction cost reasoning. In this view, fiduciary law more efficiently sets rules that the parties would adopt or, also efficiently, sets penalty default rules that they would not adopt. Drawing on new institutional economics and information economics, this paper advances another theory on the appropriate scope of contractibility with regard to fiduciary loyalty. The present account highlights information asymmetries that are more tenacious than those stemming from information production costs - to wit, asymmetries due to unobservable and unverifiable information. These asymmetries provide a compelling justification for a strict, full-disclosure-based accountability regime. A similar analysis vindicates a rather similar legal policy in traditional insurance law, in which insurance relations are based on utmost good faith and impose a duty of full disclosure on the insured.

July 29, 2016 in Articles, Professional Responsibility | Permalink | Comments (0)

Tuesday, June 21, 2016

Article on Retirement Savers & the Prudent Investor Rule

Financial advisorMax M. Schanzenbach & Robert H. Sitkoff recently published an Article entitled, Fiduciary Financial Advice to Retirement Savers: Don’t Overlook the Prudent Investor Rule, Harvard John M. Olin Center for Law, Economics, and Business, Discussion Paper No. 867 (2016). Provided below is an abstract of the Article:

Americans now hold trillions of dollars in individual retirement savings accounts, raising concerns about conflicts of interest among financial advisers who provide advice to retirement savers. Prompted by these concerns, in April 2016 the Department of Labor promulgated a rule that imposes on financial advisers to retirement savers “fiduciary” status under the Employee Retirement Income Security Act. The Department reasoned that the fiduciary duty of loyalty would protect retirement savers from conflicted investment advice. But in addition to a duty of loyalty, fiduciary status also imposes a duty of care. With respect to investment management, the fiduciary standard of care is governed by the “prudent investor rule,” which is grounded in modern portfolio theory and requires an overall investment strategy having risk and return objectives reasonably suited to the purpose of the investment account. This essay calls attention to the regulatory imposition of the prudent investor rule on financial advisers to retirement savers. The essay also canvasses the basic tenets of the prudent investor rule, highlighting its nature as principles-based rather than prescriptive, and the customary role of an investment policy statement in compliance by professional fiduciaries.

June 21, 2016 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, June 13, 2016

Customer Due Diligence Requirements for Financial Institutions

Due diligence requirementsDepartment of the Treasury, Customer Due Diligence Requirements for Financial Institutions, AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury. ACTION: Final rules. Provided below is a summary:

FinCEN is issuing final rules under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements for: Banks; brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities. The rules contain explicit customer due diligence requirements and include a new requirement to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions.

June 13, 2016 in Current Events, Professional Responsibility | Permalink | Comments (0)

Sunday, June 5, 2016

Article on Representing People Subject to Guardianship

GuardianshipNina A. Kohn & Catheryn Koss recently published an Article entitled, Lawyers for Legal Ghosts: The Legality and Ethics of Representing Persons Subject to Guardianship, 91 Washington L. Rev. (2016). Provided below is an abstract of the Article:

A person subject to guardianship has been judicially determined to lack legal capacity. Stripped of legal personhood, the individual becomes a ward of the state and his or her decisions are delegated to a guardian. If the guardian abuses that power or the guardianship has been wrongly imposed — as research suggests is not infrequently the case — the person subject to guardianship may rightly wish to mount a legal challenge. However, effectively doing so requires the assistance of an attorney, and persons subject to guardianship typically have not only been declared by a court to be incapable of directing their own affairs but have been stripped of the capacity to contract. As a result, those who wish to challenge the terms and conditions of their guardianship, or even merely to exercise unrelated retained rights, can be stymied because attorneys are unwilling to accept representation for fear that it is unlawful or unethical. Drawing on constitutional law, as well as the law of agency and contract, this Article shows why such representations are, contrary to the assumptions of many attorneys, not merely legally permissible but essential to protect fundamental constitutional rights. It then explores the professional rules governing attorney conduct in order to show how attorneys may ethically represent persons subject to guardianship. Finally, it proposes a modest change to the Model Rules of Professional Conduct to clarify attorneys’ duties in this context.

June 5, 2016 in Articles, Guardianship, Professional Responsibility | Permalink | Comments (0)

Thursday, May 19, 2016

How The New Fiduciary Rule Will Impact Accountants

Business_expenseThe new fiduciary rules have recently been issued by the United States Department of Labor.  These new rules will have a major impact on people who give investment advice to individual Retirement Account owners.  There are many pitfalls that IRA advisers will have to watch out for when giving advice to IRA holders.  This article discusses many of those pitfalls and the steps that IRA advisers can take to avoid violating the new fiduciary rules.  Financial advisers and accountants are going to need to update their practices to conform to the new federal regulations.  The new fiduciary rules are sending shocks across the estate planning industry and estate planners will need to stay ahead of these major changes. 

See Seymour Goldberg, What Accountants Should Know about the New Fiduciary Rule, Accounting Today, May 18, 2016.

May 19, 2016 in Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, May 13, 2016

Marketing Strategies People Should Adopt

MarketersProfessionals who are involved with estate planning often have to engage in the difficult process of marketing themselves to potential clients.  This article discusses some of the techniques that can be used to create an effective marketing strategy.  One of the most important things to consider when creating a marketing strategy is what type of clients or markets you are going to target.  It is also important to inform the potential clients you are marketing to about the type of experience your firm has to offer.  Estate planners can build strong professional relationships with their clients by educating them.  Incorporating different delivery methods is also an important marketing strategy.  Finally, it is important for marketing ads to have great graphics and designs to attract customers and stand out from competitors. 

See Craig R. Hersch, The Silver Bullet, Wealth Management, May 11, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 13, 2016 in Estate Planning - Generally, Professional Responsibility, Web/Tech | Permalink | Comments (0)